Exit and Growth Strategies for Middle Market Businesses

Healthcare M&A activity for North American based target companies in the sector for Q4 2014 included 94 closed deals (more than 300 announced), with an average enterprise value of $228 million. Full-year totals for 2014 broke previous records for the number of deals and the dollars spent. More than 1,200 healthcare industry transactions were announced last year, an increase of 26% over 2013’s total of 1,035 transactions. The previous record for most transactions in a year was set in 1997, at 1,287. Total deal value reached $387.4 billion in 2014, and an increase of 137% over 2013’s total of $163.7 billion. The pharmaceutical sector accounted for 55% of the year’s total spending ($213 billion) and 14% of the deal volume (188 transactions).

As for the 2015 M&A outlook in the sector, activity is likely to keep booming in the first half of 2015 as Americans continue to enroll in healthcare plans through the exchanges.

Total revenue for the US healthcare sector is forecast to grow at an annual compounded rate of 5 percent between 2014 and 2018. US consumer prices for medical care commodities, an indicator of healthcare costs, increased 4.8 percent in December 2014 compared to the same period in 2013. US consumer prices for medical care services, an indicator of profitability for healthcare services, rose 2.4 percent in December 2014 compared to the same month in 2013. Total US revenue for healthcare and social assistance rose 5.3 percent in the third quarter of 2014 compared to the previous year.

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